Money market accounts and savings accounts are both financial products that you can use to save and withdraw money.
- A saving account is a financial product that allows you to deposit money and earn interest. They don’t come with checks or the ability to schedule bill payments.
- A Money market account is very similar to a savings account, but offers a few more transactional features. Money market accounts allow you to deposit cash and earn interest, but they also usually allow a limited number of checks and bill payments each month.
| saving account | Money market account | |
|---|---|---|
| Earns interest | Yes | Yes |
| ATM withdrawals | Yes | Yes |
| Unlimited withdrawals * | No | No |
| Check writing | No | Yes |
| Automated deposits possible | Yes | Yes |
| FDIC / NCUA insured | Yes | Yes |
* The Federal Reserve has one “Provisional Final Rule” suspending Regulation D due to the economic conditions caused by the pandemic. This gave banks the ability to allow their customers more than the standard six maximum withdrawals and transfers each month. Check with your bank to clarify the withdrawal limit rules. many banks has not relaxed its policy despite the Fed ruling.
What is a savings account?
As an interest-bearing deposit account, a savings account is similar to a money market account in that there is no limit to deposits, but withdrawals are possible – up to six per month. Savings accounts are a good place to save your money and still have it available when you need it later. According to Bankrate data from the beginning of June, the average interest rate on savings accounts is only 0.06 percent, but the best savings accounts pay about 0.6 percent.
Savings accounts are a safe place to keep your savings. They are like a money market account through that Federal Deposit Insurance Corp. (FDIC) or National Credit Union Association (NCUA) up to $ 250,000 per account holder.
Advantages and disadvantages of savings accounts
| advantages | disadvantage |
|---|---|
| Interest-bearing | Nominal interest income |
| ATM withdrawals allowed | May be limited to six withdrawals or transfers per month |
| FDIC / NCUA insured | Payments on bills and checks are not allowed |
What is a money market account?
A money market account takes what works from a savings account, such as the ability to earn interest, and combines it with some of the features of a checking account, such as the ability to pay bills, make withdrawals, and write checks. There is no limit to the amount of money you can deposit into your money market and you can even schedule automatic deposits.
However, a money market account cannot completely replace a current account. Federal law limits the number of withdrawals or transfers you can make each month to six. If you want an interest-bearing account that you can use to pay a bills or two on occasion, a money market account is a great option.
According to Bankrate data from the beginning of June, the average interest rate on money market accounts is 0.07 percent. However, it is best money market accounts pay about 0.6 percent. You may find that money market accounts require a larger deposit amount to open the account or to earn the highest APY. If you want to deposit a smaller amount, a savings account may be a better option.
Remember, withdrawing and spending your money is easier with a money market account than with a savings account. If you want to make it harder to spend the money, a savings account can help you stay more disciplined than a money market account.
Advantages and disadvantages of money market accounts
| advantages | disadvantage |
|---|---|
| Interest-bearing | Nominal interest income |
| Invoice payments and checks are allowed | May be limited to six withdrawals or transfers per month |
| ATM withdrawals allowed | May require a sizeable minimum deposit |
| FDIC / NCUA insured |
You can choose between a money market account and a savings account
You don’t have to choose between a money market account and a savings account – you can have both. For example, you could have a savings account that you put money into for an upcoming trip or a down payment on a house, and a money market account that you keep some money in for you to be able to Write checks.
However, if you want to choose between a money market account and a savings account, here are some things to keep in mind.
Determine what the money will be used for
First, determine how the funds will be used. You might be interested in one Emergency fund, save for a Down payment for a house or pay for a vacation. Once you know your purpose for the money, review the pros and cons of each product to determine which is best for you. A savings account can be anything you need if you just want to save money for future use. Money market accounts are also great ways to save money for specific goals. However, since they allow you to write checks and bill payments, you can think of this account as more of a transactional account.
Compare fees and tariffs
See a bank or credit union’s fee schedule and pricing information to learn more about an account. You can find competitive interest rates on both savings accounts and money market accounts, So definitely go shopping.
Money market accounts may have higher minimum deposit and balance requirements. So think about whether you can deposit enough money to open the account and hold enough money to keep the account open.
open an account
Whether you open a savings account or a money market account, You will need some basic information. For your application you need an official ID, a social security number, a date of birth, an address and contact information.
You may need to make a minimum deposit to open the savings account or money market account. You will need the routing number and bank account number of the account you are sending money from.
Pay attention to fees
Some savings and money market accounts may charge you a monthly maintenance fee if you fail to meet certain conditions, such as: B. a minimum balance or at least one deposit per month. Make sure to follow the requirements of an account to avoid monthly fees that can hurt the growth of your savings. Or better yet, find a bank that doesn’t charge monthly fees.
Most savings and money market accounts are limited to six transfers or withdrawals per month, although your bank may have lifted this limit after the Federal Reserve’s decision. Check with your bank about the withdrawal limits of an account so that you do not exceed them, otherwise you may be charged excessive withdrawal fees.